The country's energy challenge has shifted from merely building more power plants to ensuring grid flexibility and reliability as industries become increasingly digitalized and renewable energy capacity expands, according to the Energy Regulatory Commission (ERC).
ERC highlights system flexibility over supply adequacy
Speaking at Schneider Electric Philippines' Innovation Day 2026 in Cebu on Wednesday, June 24, 2026, ERC executive director Atty. Nancy Aurora Fajardo said recent yellow and red alerts in the Visayas have exposed vulnerabilities in the power system despite generally adequate generation capacity.
“For many years, discussions about power reliability were largely framed around a single question: Do we have enough power plants?” Fajardo said. “Recent yellow and red alerts in the Visayas demonstrate that today's challenge is no longer simply supply adequacy, but system flexibility.”
Yellow alert in Visayas
The Visayas grid was placed under yellow alert on Wednesday from 5 p.m. to 9 p.m. due to thin operating reserves. Data from the National Grid Corp. of the Philippines (NGCP) showed available capacity at 2,542 megawatts (MW) against peak demand of 2,362 MW.
The yellow alert was triggered by the unavailability of major coal-fired power plants, including TVI Units 1 and 2 and PEDC Unit 3, as well as higher demand forecasts. A yellow alert is declared when the operating margin is insufficient to meet the transmission grid's contingency requirement.
NGCP said eight power plants were on forced outage in June, while eight others have remained offline since May. Additional outages include one plant since March, three since 2025, two since 2024, two since 2023 and one since 2021. Another 15 power plants were operating at reduced capacities, resulting in a total of 992.1 MW unavailable to the grid.
Economic issue
According to Fajardo, energy security has become an economic issue as much as a technical one, with power disruptions affecting industrial operations, supply chains, business costs and investor confidence.
“When power systems come under stress, industries adjust operations, supply chains face disruptions, business costs increase, and investor confidence can be affected,” Fajardo said. “Reliability remains the foundation upon which innovation, industrialization and long-term competitiveness are built.”
The regulator noted that future-ready industries such as manufacturing, data centers, logistics facilities, hospitals and digital platforms depend heavily on a reliable electricity supply.
Battery storage
Fajardo said battery energy storage systems are becoming increasingly important in addressing grid flexibility requirements by storing excess renewable energy and deploying it during periods of peak demand.
The ERC has received 17 applications related to battery energy storage projects in the Visayas and Mindanao, which she said reflects growing investor confidence in technologies that can strengthen grid reliability.
The commission also backed the Department of Energy's policy requiring new variable renewable energy projects with capacities of at least 10 megawatts to integrate energy storage systems equivalent to at least 20 percent of installed capacity.
Updating Philippine Grid Code
Moreover, the ERC is updating the Philippine Grid Code to accommodate the growing role of inverter-based technologies such as solar, wind and battery storage facilities, which are increasingly being recognized as contributors to frequency regulation and voltage stability.
Beyond generation and storage, the ERC emphasized the need to strengthen transmission infrastructure to support the country's renewable energy expansion.
Fajardo said the commission recently approved adjustments to the NGCP's revenue requirement to fund grid modernization and transmission upgrades needed to accommodate new generation projects.
ERC opens transmission projects
The ERC has likewise issued a framework allowing entities other than NGCP to finance and construct certain transmission projects to accelerate infrastructure development and reduce project delays.
She said the Visayas and Mindanao are emerging as major centers for industrial growth, innovation and renewable energy development, making reliable electricity increasingly critical to sustaining economic expansion.
“Future-ready industries depend on reliable power. Without energy security, innovation, investment and growth cannot thrive,” Fajardo said.
The ERC said it will continue updating regulatory frameworks to support a more resilient, flexible and future-ready power sector as the country pursues its energy transition goals.
